Rangelands NRM Blog, News & Resources

Carbon abatement shifts up a gear

[May 2015]

This month, Rangelands NRM’s Senior Rangeland Scientist Dr Peter Russell talks about the international response to climate change and the status of Australia’s carbon farming.

International action

While many would argue that the moves to address climate change are too slow and small in scale, particularly in Australia, there is a revitalised ground swell of action by many countries to tackle climate change.

It really gained traction mid last year when United States’ (US) President Obama unveiled historic environmental rules cutting carbon pollution from power plants by 30 per cent. Then, in the lead up to the United Nations Framework Convention on Climate Change (UNFCCC) Lima Conference late last year, we saw announcements of US bilateral agreements with China and India, and more in the lead up to the Paris Kyoto talks in December 2015. Countries have been asked by the United Nations (UN) to provide indicative national abatement targets prior to the Paris talks. As of early May 2015, 37 countries had announced indicative post-2020 targets; including the US, China, India, the European Union (EU), Russia and Mexico.

In order to set a target, many countries are developing comprehensive climate policies for the first time, which is no easy task. Effective policies must address complex interrelated aspects such as the generation of clean electricity, transport, manufacturing, development of carbon-neutral cities and towns, land use and valuing the critical role of natural areas such as oceans, forests and rangelands in climate change amelioration.

The 2015 UN Climate Change Conference in Paris is set to provide effective and positive outcomes for our planet, on our ˜winding track’ to decarbonisation. 

Australia’s climate change response

Subject to Paris 2015 outcomes, the Australian Government said it is willing to consider implementation of additional policy measures supplementary to its Direct Action (DA) carbon abatement program.

Built on the Carbon Farming Initiative (CFI), DA is based on two legal pillars:

  • the Carbon Credits (Carbon Farming Initiative) Act 2011 and an amendment, the Carbon Farming Initiative Amendment Act 2014, and
  • the National Greenhouse and Energy Reporting (NGER) Act 2007.

The CFI Acts provide the framework for investment in carbon abatement, that is, the generation of Australian Carbon Credit Units (ACCUs) by eligible projects and their sale to either the Australian government or into the secondary market. The Clean Energy Regulator (CER) is the principal administrator of the CFI process, mainly by entering into contracts for the purchase of ACCUs following a carbon abatement purchasing process such as the recent reverse auction.

The NGER Act is applicable to large designated facilities such as power stations, cement manufacturing plants, and mineral, oil and gas extraction operations. Each facility will be assigned a ‘baseline emissions number’ which must not be exceeded, except by surrendering prescribed carbon units. This is the ‘Safe Guard Mechanism’, the obligation enforceable by civil penalties and/or Federal Court injunction.

The Emissions Reduction Fund (ERF) is the bucket of money, initially $2.55 billion, allocated for the purchase of ACCUs from eligible abatement projects. It is the centre piece of DA, designed to deliver Australia’s abatement targets. With the recent CER auction purchasing $660 million worth of ACCUs, the ERF has been reduced to about $1.89 billion.

Greenhouse gas abatement targets

Together, the CFI-ERF and NGER will contribute to Australia meeting its current national greenhouse gas abatement targets under the Kyoto Protocol. The current target is five per cent reduction from year 2000 levels by 2020. However, modelling by several energy and carbon market analysts casts doubt on the effectiveness of the ERF in its present form.

Australia’s future emissions target, post-2020, is still being decided (see recently released issues paper).

Direct Action changes and carbon farming implications

Recent developments have provided much improved clarity to the structure and functioning of the DA program.

In April, the CER announced five new carbon abatement project methods that were described in Rangelands NRM April eNews.

Another change to sequestration projects is the option to choose a permanence period of 25 or 100 years. While still allowing Kyoto-compliant 100 year permanency, if 25 years is chosen for a particular project, there is a 20 per cent reduction in ACCUs attributed to the project.

From 1 July 2015, the crediting period (the length of time that a project will receive ACCUs) will be seven years for emission reduction projects and 25 years for sequestration projects, although there are no changes for avoided deforestation and savannah burning projects.

Further, the new ERF reporting periods are as frequent as every six months for some types of projects but, for emissions avoidance projects including savannah burning, it is a reasonable two- year maximum reporting cycle, and every five years for sequestration projects.

For savannah burning projects, the new method for +600mm rainfall areas was released in March 2015 and the new version of the abatement tool SavBAT2 has made use of the method much easier. Overall, these are positive moves, however, there remain at least two important potential limitations. The first is that the start of the late dry season is fixed at 1 August, meaning that with a delayed or prolonged wet season, emissions reduction burning may be difficult before August. The second is that in the 600’1000mm rainfall zone, there are many ineligible vegetation classes including grasslands and pindan. More information on changes to the savannah burning method can be found on the Aboriginal Carbon Fund website.

In terms of the financials of carbon abatement, for all projects, ACCU transactions must be completed within a single financial year. Also, the Corporations Act (2001) has been amended to exempt carbon abatement contracts from the definition of a ˜derivative and a ˜financial product’. A ˜carbon abatement contract’ is entered into with the Clean Energy Regulator (CER) for the sale of ACCUs and both the seller and buyer have ANREU (Australian National Registry of Emissions Units) accounts. This means that, subject to meeting the exemption conditions, a project proponent or aggregator, is not required to hold an Australian Financial Services Licence (AFSL).  For more information on this very important aspect, see the Australian Securities and Investments Commission (ASIC) website.

Australia’s climate change science 

As for Australia’s science on climate change, CSIRO and the Bureau of Meteorology have recently updated their Climate Change in Australia website with comprehensive information, projections and an interactive map tool of future climate scenarios.

CSIRO is developing cost effective approaches to the estimation of biomass carbon stocks in complex, natural ˜woody’ vegetation systems such as woodlands and forests. Their work will result in a new Reforestation Method (previously called a methodology) in 2016, incorporating both modelled and field measured estimates.

This work has close similarities to the work, including development of plant biomass allometric equations, which Rangelands NRM has been doing in the Murchison mulga woodlands over the last few years as part of the Carbon Awareness Project.

An updated version of carbon stocks modelling software, FullCAM, will also be released in this month. A free download of the current version is available on the Department for the Environment website.

For more information, contact Dr Peter Russell, Senior Rangelands Scientist.

 

Images
Indicators of a world experiencing a consistent pattern of warming – courtesy of Bureau of Meteorology and CSIRO.
1With regional variation (almost all glaciers worldwide losing mass but some gaining) but overall net loss.
2With regional variation (large loss in the Arctic, small net gain in the Antarctic) but overall net loss.
Rangelands NRM Meka Carbon Demonstration Project sampling of mulga for laboratory analysis of moisture, carbon and nitrogen contents (photo by Peter Russell).